Time for Congress to Go Home; Student Loan Payments Set to Resume
Author: Greg Valliere
December 17, 2021
ANY FLICKER OF HOPE for the Build Back Better bill was extinguished yesterday, as President Biden conceded that debate will have to resume in January. And a last-ditch attempt to pass a voting reform bill appears to be equally moribund.
SO CONGRESS WILL LEAVE TOWN WITHIN DAYS after confirming some ambassadorial appointments and agreeing on a bill to curb imports from China’s Xinjiang province, where Uyghur Muslims reportedly have been subjected to forced labor. After months of bitter divisiveness, perhaps the one area of agreement in Washington is that China must be confronted.
A COUPLE OF WEEKS OFF should be therapeutic for the bitterly divided Congress; the markets should be happy since they perform better when Congress isn’t in session. And the biggest Washington policy issue — the direction of monetary policy — has been resolved for now.
THE ERA OF ENORMOUS SPENDING — embraced by Donald Trump and Joe Biden — has hit a major pothole, largely because of one senator, Joe Manchin. The debate will resume in January, with Biden and the Democrats playing defense as a Feb. 18 deadline looms for funding the government.
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SOURCES SAY THERE’S LITTLE CHANCE that the Biden Administration will extend the nearly two-year moratorium on student loan payments, which will end on Jan. 31. Starting on Feb. 1, the 43 million Americans who have student loans will have to resume payments averaging $393 per month — a de facto tax hike.
PROGRESSIVES WANT MORE RELIEF, but chances are zero that there will be loan forgiveness, and chances are less than 30%, in our opinion, that there will be any extension of the payment moratorium. President Biden has proposed forgiving $10,000 in loans, but progressives say that’s inadequate; like many issues, there’s no agreement in Congress on forgiveness.
THE MOST THAT BIDEN is willing to do is extend some payment terms, including some relief for first responders and other crucial workers. Progressives like Elizabeth Warren are urging Biden to issue an executive order to extend the moratorium, but he has been insistent on ending it by Feb. 1.
OUTSTANDING STUDENT LOAN DEBT has doubled over the past decade, nearing an eye-popping $1.7 trillion. About one in six American adults owes money on federal student loan debt, which is the largest amount of non-mortgage debt in the U.S.
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